"(The) ability of government to quickly induce changes in behavior of large intermediaries...

"(The) ability of government to quickly induce changes in behavior of large intermediaries through financial incentives is quite limited," concludes an academic study of why the full force of the federal government has resulted in only 900K mortgage modifications in 3 years. Is that PhD-speak for "central planning doesn't work?"

The reason for this is simple. Most of the original mortgages were made to persons either completely insolvent or on a course of fraud from the outset, so modifications of payment terms are near meaningless, as there was never either the ability or intention to pay, or both.

All the authors are saying is that government intervention has its functions and its limits, like any practice.

It’s ridiculous to claim that a specific limitation reflects on the ability of the government to do anything at all. And of course, not all government intervention is ‘central planning’ (‘‘Oh my God, the Soviets are here! Panic!’’)